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Mohan purchased goods for Rs. 15,00,000 and sold 4/5th of the goods amounting Rs. 18,00,000 and met expenses amounting Rs. 2,50,000 during the year, 2011. He counted net profit as Rs. 3,50,000. Which of the accounting concept was followed by him?
- a)Entity.
- b)Periodicity.
- c)Matching.
- d)Conservatism.
Correct answer is 'C'. Can you explain this answer?
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Most Upvoted Answer
Mohan purchased goods for Rs. 15,00,000 and sold 4/5thof the goods amo...
The accounting concept followed by Mohan is Matching.
Explanation:
Matching concept is an accounting principle that requires businesses to match expenses incurred in a given accounting period with the revenue earned in the same period. This principle ensures that the financial statements reflect the actual profit or loss earned during the period.
In this case, Mohan purchased goods for Rs. 15,00,000 and sold 4/5th of the goods amounting Rs. 18,00,000. He also incurred expenses amounting Rs. 2,50,000 during the year. To calculate the net profit, Mohan subtracted the expenses from the revenue earned.
However, according to the matching concept, Mohan should have deducted the cost of goods sold (COGS) from the revenue earned to arrive at the gross profit. Then, he should have deducted the expenses incurred during the period from the gross profit to calculate the net profit.
Therefore, by deducting only the expenses incurred during the period from the revenue earned, Mohan violated the matching concept of accounting.
Explanation:
Matching concept is an accounting principle that requires businesses to match expenses incurred in a given accounting period with the revenue earned in the same period. This principle ensures that the financial statements reflect the actual profit or loss earned during the period.
In this case, Mohan purchased goods for Rs. 15,00,000 and sold 4/5th of the goods amounting Rs. 18,00,000. He also incurred expenses amounting Rs. 2,50,000 during the year. To calculate the net profit, Mohan subtracted the expenses from the revenue earned.
However, according to the matching concept, Mohan should have deducted the cost of goods sold (COGS) from the revenue earned to arrive at the gross profit. Then, he should have deducted the expenses incurred during the period from the gross profit to calculate the net profit.
Therefore, by deducting only the expenses incurred during the period from the revenue earned, Mohan violated the matching concept of accounting.
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Mohan purchased goods for Rs. 15,00,000 and sold 4/5thof the goods amo...
Matching concept = Revenue - expense = profit example:- =>1800000+300000-1500000+250000 =>2100000- 1750000 => 350000
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Mohan purchased goods for Rs. 15,00,000 and sold 4/5thof the goods amounting Rs. 18,00,000 and met expenses amounting Rs. 2,50,000 during the year, 2011. He counted net profit as Rs. 3,50,000. Which of the accounting concept was followed by him?a)Entity.b)Periodicity.c)Matching.d)Conservatism.Correct answer is 'C'. Can you explain this answer?
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Mohan purchased goods for Rs. 15,00,000 and sold 4/5thof the goods amounting Rs. 18,00,000 and met expenses amounting Rs. 2,50,000 during the year, 2011. He counted net profit as Rs. 3,50,000. Which of the accounting concept was followed by him?a)Entity.b)Periodicity.c)Matching.d)Conservatism.Correct answer is 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Mohan purchased goods for Rs. 15,00,000 and sold 4/5thof the goods amounting Rs. 18,00,000 and met expenses amounting Rs. 2,50,000 during the year, 2011. He counted net profit as Rs. 3,50,000. Which of the accounting concept was followed by him?a)Entity.b)Periodicity.c)Matching.d)Conservatism.Correct answer is 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mohan purchased goods for Rs. 15,00,000 and sold 4/5thof the goods amounting Rs. 18,00,000 and met expenses amounting Rs. 2,50,000 during the year, 2011. He counted net profit as Rs. 3,50,000. Which of the accounting concept was followed by him?a)Entity.b)Periodicity.c)Matching.d)Conservatism.Correct answer is 'C'. Can you explain this answer?.
Mohan purchased goods for Rs. 15,00,000 and sold 4/5thof the goods amounting Rs. 18,00,000 and met expenses amounting Rs. 2,50,000 during the year, 2011. He counted net profit as Rs. 3,50,000. Which of the accounting concept was followed by him?a)Entity.b)Periodicity.c)Matching.d)Conservatism.Correct answer is 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Mohan purchased goods for Rs. 15,00,000 and sold 4/5thof the goods amounting Rs. 18,00,000 and met expenses amounting Rs. 2,50,000 during the year, 2011. He counted net profit as Rs. 3,50,000. Which of the accounting concept was followed by him?a)Entity.b)Periodicity.c)Matching.d)Conservatism.Correct answer is 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mohan purchased goods for Rs. 15,00,000 and sold 4/5thof the goods amounting Rs. 18,00,000 and met expenses amounting Rs. 2,50,000 during the year, 2011. He counted net profit as Rs. 3,50,000. Which of the accounting concept was followed by him?a)Entity.b)Periodicity.c)Matching.d)Conservatism.Correct answer is 'C'. Can you explain this answer?.
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